The development of British competition law. A complete overhaul and harmonization

The operation of the Commission in practice

At least in part because of the absence of any clear statement by Parliament of how

the Commission was to approach its task, the Commission, in its approach to any

particular reference, was greatly influenced by the politico-economic climate that

was prevalent at the time of the reference. Thus, between 1960 and the early 1980s

there were substantial periods when the old, socialist, Labour Party was in power.

The Labour Government of that period attempted to grapple with the perennial

problems of inflation, sluggish economic growth and a balance of payments deficit

by national plans and agreements with the trade unions, which were almost an arm of

government, and by governmental control of prices and wages.

In that climate the Monopolies and Mergers Commission tended to concentrate

excessively on the profitability of the scale monopolists that the Commission

investigated. The unfortunate consequences of that approach were compounded by

the rapid inflation that occurred for much of the period which resulted in an

overstatement of true profitability in companies’ accounts, which generally used

Historical Cost Accounting conventions. At times the MMC almost resembled a

Price Control Commission.

In merger references, because of the ascendancy of the trade unions, it was

extremely dangerous for the parties to draw attention to the scope for shedding

labour that the merger would provide; on the contrary, parties to mergers used to

assure the trade unions concerned and the MMC that the merger would not result in

any redundancies or at least any involuntary redundancies – even though British

industry was grossly in need of restructuring to improve productivity per employee.

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